Utility Transformation: Customer Engagement Through Insights and AI
29 May 2018
Lee Morris, Managing Director & VP Sales EMEA, FirstFuel Software & Austin Whitman, VP Energy Markets, FirstFuel Software
Energy providers have enjoyed decades of stable, low-risk business conditions. But this environment is rapidly changing as customers increasingly have access to many new alternatives. To keep pace, many energy providers are turning their focus towards delivering better customer service and moving beyond simply billing their customers. And they are focusing on their most important segment: business customers.
But how are the leading energy providers planning to thrive in this environment? By leveraging their existing data and unearthing insights that enable a digital transformation.
Using customer intelligence and insights, energy providers can give business customers what they are really after: a way to reduce energy spend and implement a highly customised energy strategy that meets their specific goals and needs. These insights also give energy providers a prime opportunity to build lasting business customer relationships, even as the number of competitive options continues to increase.
In this video, we explore the power of business customer engagement to improve customer satisfaction, grow revenue streams, and reduce service costs.
To learn more, visit www.firstfuel.com today.
Video transcript :
Hello and welcome to Business Reporter's digital economy campaign. I'm Alastair Greener. Energy providers have enjoyed decades of stable, low risk business conditions. But all of that is changing, because their customers now have access to so many new alternatives. Before these options came about, utilities were guaranteed customers and had little incentive to focus on customer service. Customer satisfaction with utilities was among the lowest of all industries.
Now utilities are turning their focus towards better customer service and moving far beyond simply billing their customers. This is especially important for business customers. How exactly do utilities plan to thrive in this environment? Well, this is what we're going to discuss today with the experts from FirstFuel Software.
Give me an overview, what are the challenges that the energy industry is facing at the moment?
So simply put, it's being driven by customer expectation. So there's a lot of pressure on the major providers to at least keep pace with innovation and bring out services and solutions that the consumer can see value in. Providing energy used to be a very stable business. It's now not so much.
For one, technology has enabled cost competitive alternatives, such as solar and biomass, to become much more available. And also consumers are much more savvy in looking for a deal. So they're more attracted to these new services. So all of this put together causes a shift.
And fundamentally, as a commodity, is it growing or is it shrinking as an industry?
So economy wide, it's fairly flat. There's certain peaks, driven usually by outside sectors, such as manufacturing or construction. But ultimately, it's comparatively flat. And there's two real drivers for that.
The business customers now are looking to reduce consumption, whether that's for regulation reasons or their own strategy, but they're looking to reduce. And as I've said, they're more interested in alternative solutions and getting the best deal. It's a big move for them.
So it's a big move, it's a fairly flat industry. It almost makes it sound like providing energy is not really much of a business model these days.
I think we probably have five, six years before that becomes the case. But what we are seeing is a lot of compression of energy margins if you're selling energy only as a commodity. But fortunately, if you're a provider of energy, you're in a great position to now be selling more products and services, which are higher margin.
And that's really the key to the future, is using the relationship you have with your customers from selling energy and turning that into a relationship where you're selling other products and services that are adding value to the customer.
And one of the things that you are doing as well is trying to reduce costs for companies and businesses so they're using less energy. The trouble is that's almost counter-intuitive, because that would imply less profits for you.
It would, but it comes down to, again, what are the margins for selling one product versus another. And if I'm an energy provider, I'm making that comparison, and I'm looking at things that I can do, products, services, that will provide value to the customers that I'm serving, and then also provide value to me as an enterprise. And that's really going to be the key to the future.
What are these products and services, these new additions to your business model that you're providing?
So it's really interesting, when you look at what some of the energy providers are looking into. It ranges from light bulb replacement projects, through to battery storage installations, all the way through to energy management software and solutions. So its vast.
And some of them are moving into the product business, which probably they didn't expect to do a few years ago. And some are now looking at where do I put charging points for electric vehicles. So very future kind of thinking.
Exactly, being such a different landscape, it has meant that you've had to go through this incredible transformation. Is this quite unique to the energy industry or is it affecting other industries as well?
So a good comparison would be that the telecoms business. Going back, they provided a service which was critical, but it simply became a commodity with telephone lines. And if you look at how they've adapted, if you look at some of the large telcos today, they provide broadband services, infrastructure, TV entertainment. Their portfolio is vastly different.
So that's a really good example of a sector feeling a change seen through competition, and then adapting to be more servicing to their customers.
It's quite a change, isn't it, for any organisation to undergo? And we all know that adapting is quite difficult for many organisations. So how did they manage that change in the telecoms industry?
The key for them has really been data and finding ways to use the existing data that they're sitting on around their customers' use of telecommunication services, and turning that into businesses where they're selling more services, like Netflix or Spotify. So we call this cross-selling. Understanding your customers' needs and their wants and then finding additional products and services that you can introduce to them.
And how has the energy business managed to take that concept and put it into their business?
So I think if you look at it as two halves, we're at kind of the midway point. The first half has been about really acknowledging that there is an opportunity in the shift, understanding what strategies need to be applied to it, and also listening to customer expectation and believing that there needs to be a change.
The two big transformations that are sitting in between those two are understanding that actually that energy providers are sitting on an extremely great piece of asset, which is customer data, and how do they use that data. And also, which is quite interesting, there's a transformation piece as well.
So if you think of an energy provider sales and marketing teams, traditionally they'll be engaged with the customer on a very regular basis. But it will be around a bill or some kind of transaction. Those teams now have to adapt to sell more services and be much more engaged with the customer on a regular basis. So it's a big change for them to undertake, but what a great opportunity. If the companies can get it right, they engage the customer much more, they up-sell, they cross-sell, it's a fantastic opportunity for them to be more customer focused.
Fundamentally though, when we look at energy and the pricing of energy, you talk about trying to make savings for your customers, but doesn't it really come down to world politics, supply, security, and things like that. What are the other things that you can do that can actually change the business model for the better?
This comes down to the idea of localization. So localization of the consumption and localization of the production of energy. So think about something like solar panels. They produce energy locally. The more electricity that you use locally, the more you're taking advantage of things like solar panels. And so we're seeing this move really toward, again, consumption, production, becoming more local.
And so from a business perspective, this becomes really attractive, because you start to be able to take advantage of these new technologies and gain cost advantages from the more that you can incorporate into your operations.
It's interesting, you talk about businesses and the costs, because ultimately businesses are businesses. They have to think about the bottom line. They have shareholders to report to. So for them, they must have a real challenge about the whole green initiative, sustainability. How actually interested are they in it if it's not necessarily going to bring them savings?
More and more businesses are really filing sustainability reports, where they have to report on the carbon impact of their energy use and really the sources of their energy. And so, as we see this more and more, businesses are turning to their energy providers for products that can support that story.
And so the energy provider's become an important part of their supply chain, because they're the ones who are standing up and saying this is the energy that I'm providing you, you can turn and reflect that back to your customers, and they will be happy about your choices of energy.
It's really interesting to see how the sector is really, really undergoing a lot of change at the moment, and how the sustainability issues are in there, savings issues in there, and of course, technology being very much a part of that as well. Lee Morris, Austin Whitman from FirstFuel. Thank you very much.